April 30, 2018
Category: Legal Updates
In November 2017, the Ninth Circuit (covering California, Washington, Oregon, Nevada, Hawaii, Alaska, Idaho, Arizona, Montana) decided that the Fair Labor Standard Act’s (“FLSA”) hourly minimum wage requirement applies to weekly per-hour averages rather than actual per-hour pay. This means that the appropriate way to determine minimum wage compliance under the FLSA during any workweek is by calculating the pay earned during the entire workweek, rather than the pay earned in each individual hour of the workweek.
In Douglas, et al. v. Xerox Business Services, LLC, plaintiffs were customer service representatives whose primary duties were to answer incoming calls, attend meetings, attend trainings, and monitor emails. Each plaintiff earned a different rate of pay depending on the task performed and the time spent on each task. The Xerox pay system averages pay for all hours worked in a week and increases it to minimum wage in any weeks where the average variable compensation fails to meet this level. Under this practice, no employee’s average weekly pay ever fell below the minimum wage.
The plaintiffs sued, arguing that they were entitled to back pay for every hour worked at a rate lower than the minimum wage. Specifically, the plaintiffs argued that the FLSA did not allow averaging over a longer period of time, but rather measures compliance on an hourly basis.
Ultimately, the Ninth Circuit rejected plaintiffs’ claims and concluded that Xerox had not violated the FLSA. The court accepted Xerox’s position that compliance with the FLSA’s minimum wage provisions is determined on a weekly rather than an hourly basis.
What Does This Mean For You? As a result of the Ninth Circuit’s holding, the hourly minimum wage requirement now applies to weekly per-hour averages rather than actual per-hour pay. And, although the FLSA may be read to require either hourly or weekly compensation, the Ninth Circuit highlighted the fact that the Department of Labor has interpreted and enforced the minimum wage provisions of FLSA on a workweek basis since 1938. In short, this decision avoids a split among the circuits and further reinforces the ability of employers to assure compliance with minimum wage requirements by averaging total pay divided by the number of hours worked in a given workweek.
For more legal news, check out our quarterly newsletter for April 2018!